Exhibit
      10.1


    FARM-OUT
      ASSIGNMENT

    OF
      CORRECTION

    (Correcting
      prior Assignments dated October 4, 2007

    and
      December 10, 2007)

    


    THIS
      FARM-OUT ASSIGNMENT OF CORRECTION made and entered into this the 18th day of
      June, 2008, by and between K & D ENERGY, a Kentucky Partnership, by
      Partners, Danny Thomasson, of P. O. Box 360, Bremen, Kentucky 42325, and Keith
      Conn, 85 Tyson Lane, Dunmore, Kentucky 42339, being all partners in the
      partnership, hereinafter ASSIGNOR and KY USA ENERGY, INC., C/O Steve Eversole,
      321 Somerset Road, London, Kentucky 40741, hereinafter ASSIGNEE;

     

    WITNESSETH:
      Whereas, ASSIGNOR owns certain oil and gas leases in West Central, Kentucky,
      more specifically described hereinafter and desire to do this Farm-Out
      Assignment to ASSIGNEE to form a core basis for a publicly traded company so
      that money can be raised to fully develop the project from which ASSIGNOR will
      receive a carried working interest and by their signatures below the parties
      agree to this Assignment on the following terms and conditions:

     

    WITNESSETH:
      WHEREAS ASSIGNOR executed and delivered to ASSIGNEE a “Farm-Out Assignment”
dated October 4, 2007 and recorded as follows:

     

    Christian
      County, Kentucky Lease Book 43, page 484;

    Muhlenberg
      County, Kentucky Lease Book 94, page 697;

    Todd
      County, Kentucky Lease Book 22, page 700;

    


    and
      a
“Supplemental Farm-Out Assignment” dated December 10, 2007 and recorded as
      follows:

     

    Christian
      County, Kentucky Lease Book 43, page 514;

    Muhlenberg
      County, Kentucky Lease Book 95, page 27;

    Todd
      County, Kentucky Lease Book 22, page 705; and,


    WHEREAS,
      Paragraph #5 of the above Farm-Out Assignment dated October 4, 2007 incorrectly
      indicates a first right to drill oil above the New Albany Shale (Devonian)
      is
      being assigned to ASSIGNEE with a reversion to ASSIGNOR of any undrilled
      locations above the New Albany Shale that appear favorable. This correction
      is
      being executed to delete all rights of production for oil and gas above the
      New
      Albany Shale. ASSIGNEE is receiving the rights to produce the New Albany Shale
      and all deeper formations for both oil and gas; and,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS
      some requirements for the original Farm-Out Assignment have already been met,
      such as payment and extension of the Walker and Lacefield/Taylor Leases, this
      Assignment is corrected and re-executed as follows:

     

    
      	 	
              1.

            	
              ASSIGNOR
                does hereby Farm-Out Seventy-Five Percent Net Revenue Interest (75%
                N.R.I.) In and to 2099 acres, comprised of nine (9) separate mineral
                leases, to ASSIGNEE. The farm-out interest is hereby granted as One
                Hundred Percent Working Interest (100% W.I.); thereby ASSIGNEE will
                pay
                100% of the drilling, completion, and operation costs to earn their
                75%
                NRI.

            


    

    


    
      	 	
              2.

            	
              The
                purchase price for the subject leaseholds has been delivered to ASSIGNOR’S
                Bank Account of choice via wire-transfer
                (EFT).

            


    

    


    
      	 	
              3.

            	
              ASSIGNEE
                must continue drilling to retain their Farmed-In rights. They must
                drill a
                minimum of twelve (12) New Albany Shale wells per year, until all
                locations have been developed on the available acreage, to maintain
                their
                rights.

            


    

    


    
      	 	
              4.

            	
              This
                assignment pertains to the New Albany shale and all formations beneath
                it
                for all hydrocarbons. All formations above the new Albany shale are
                reserved for ASSIGNOR. Should conflict ever occur in the development
                of
                the leases on matters such as well location, location of roads,
                infrastructure and similar matters, the rights assigned herein shall
                be
                superior to the rights retained by
                ASSIGNOR.

            


    

    


    
      	 	
              5.

            	
              ASSIGNEE
                will have the option to contract ASSIGNOR for management of drilling
                and
                completion operations, and shall receive $10,000.00 per well for
                this
                service, due at the commencement of drilling
                activities.

            


    

    


    
      	 	
              6.

            	
              ASSIGNOR
                shall have the right to sell gas from any of its pre-existing gas
                wells on
                the project acreage, including the new Slinker #1 well, into the
                natural
                gas gathering line network that ASSIGNEE will construct without being
                assessed any fees, including but not limited to transportation,
                compression, or scrubbing of said gas. This right shall also extend
                to any
                shallow wells drilled in the future by ASSIGNOR at its own
                expense.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              7.

            	
              ASSIGNEE
                shall maintain General Liability Insurance at all times during the
                project, and shall name as Additionally Insured: ASSIGNOR and its
                successors and assigns in these leases, as well as Mr. Danny Thomasson
                and
                Mr. Marvin K. Conn as individuals. The General Liability Insurance
                policy
                shall provide the following minimum coverage limits: General Aggregate
                $2
                Million; General Liability $1 Million; Products and Completed Operations
                $1 Million; Environmental Spills & Cleanup $1 Million; and Medical
                Payments $10,000.

            


    

    


    
      	 	
              8.

            	
              ASSIGNEE
                shall be responsible for all legal work associated with obtaining
                a Title
                Opinion for the subject leaseholds.

            


    

    


    
      	 	
              9.

            	
              ASSIGNEE
                shall assume responsibility for all land and crop damages arising
                from
                drilling or production activities such as road & location
                construction, spills, etc.

            


    

    


    
      	 	
              10.

            	
              ASSIGNEE
                shall assume responsibility for the maintenance of the leasehold
                property
                and infrastructure including roads, gates, etc.; insofar as said
                maintenance shall extend only to that leasehold infrastructure that
                will
                be utilized or created as a result of this agreement. This clause
                shall
                take affect on the date of closing of this agreement and the leasehold
                infrastructure, with all pre-existing structures and improvements
                shall be
                transferred “as-is” on that day.

            


    

    


    NOW,
      THEREFORE, for and in consideration of the above terms and conditions, and
      one
      dollar ($1.00) plus other good and valuable considerations, the receipt and
      sufficiency of which are acknowledged, the ASSIGNOR does hereby bargain,
      transfer and assign to ASSIGNEE the following described Oil and Gas
      Leases:

     

    
      	
              Lease
                Name

            	
              County

            	
              Lease
                Book/Page

            	
              Date

            	
              Acreage

            
	 	 	 	 	 
	
              Lakefield/Taylor

            	
              Muhlenberg

            	
              94/83
                & 94/452

            	
              10/18/07

            	
              130

            
	
              &
                94/734

            	 	 	 	 
	
              Freda/Jeff
                Johnston

            	
              Todd

            	
              22/697

            	
              10/08/07

            	
              323

            
	
              Freda/Jeff
                Johnston

            	
              Christian

            	
              43/464

            	
              10/08/07

            	
              326

            
	
              Milda
                Walker (William Walker)

            	
              Todd

            	
              22/672

            	
              4/25/07

            	
              184

            
	
              Michael
                Slinker

            	
              Muhlenberg

            	
              94/332
                (Lease)

            	 	 
	 	 	
              94/537
                (Extension)

            	
              6/30/06

            	
              187

            
	
              Billy
                Johnston

            	
              Christian

            	
              43/137

            	
              7/1/04

            	
              130

            
	
              Billy
                Johnston

            	
              Todd

            	
              22/430

            	
              7/1/04

            	 
	
              Golden
                Eagle/Walter

            	
              Todd

            	
              22/258
                & 22/318

            	
              4/16/01

            	
              80

            
	
              Francis/Grace

            	
              Christian

            	
              41/263

            	
              10/21/92

            	
              200

            
	
              Hunter/Wells

            	
              Christian

            	
              41/23
                & 41/19 &

            	 	
              543

            
	 	 	
              41/19

            	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TO
      HAVE
      AND TO HOLD unto ASSIGNEE, its successors and assigns, a 75% Net Revenue
      Interest as the 100% Working Interest in above described leases, subject to
      all
      the aforesaid terms and conditions, as well as all terms and conditions in
      the
      original leases with only such Warranty of title as ASSIGNOR actually
      possesses.

     

    ASSIGNOR
      does warrant that there are no undisclosed material defects in the above leases
      of which ASSIGNOR is aware and the ASSIGNOR has taken no action or made no
      omissions in actions that would render any of the above leases invalid or of
      no
      effect.

     

    ASSIGNEE
      by signature below acknowledges the changes in the original assignment set
      out
      herein. 

     

    WITNESS
      the signatures of the parties hereto on this the 18th day of June,
      2008.

    


    
      	
              K
                & D ENERGY, Assignor

            
	 	 
	
              BY:

            	
               

            
	 	
              DANNY
                THOMASSON, Partner

            
	 	 
	
              BY:

            	
               

            
	 	
              KEITH
                CONN, Partner

            
	 	 
	 	 
	
              KY
                USA ENERGY, INC., Assignee

            
	 	 
	
              BY:

            	
               

            
	 	
              STEVE
                EVERSOLE, President

            


    

     

    COMMONWEALTH
      OF KENTUCKY

    


    COUNTY
      OF____________________

    


    SIGNED
      AND ACKNOWLEDGED to before me by K & D ENERGY, Assignor, by and through its
      partner, DANNY THOMASSON, who personally appeared before me and known to me
      or
      satisfactorily identified by me, to be his free act and deed, on this the _____
      day of June, 2008.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

    

    
      	
               
                

            
	
              NOTARY
                PUBLIC - State at Large - KY

            
	 
	
              My Commission Expires:

            	 	 


    

     

    COMMONWEALTH
      OF KENTUCKY

    


    COUNTY
      OF
      ______________

    


    


    SIGNED
      AND ACKNOWLEDGED to before me by K & D ENERGY, Assignor, by and through its
      partner, KEITH CONN, who personally appeared before me and known to me or
      satisfactorily identified by me, to be his free act and deed, on this the
      _______ day of June, 2008.

     

    
      
        	 
	
                NOTARY
                  PUBLIC - State at Large - KY

              
	 
	
                My Commission Expires:

              	 	 


      

    

     

    COMMONWEALTH
      OF KENTUCKY

    


    COUNTY
      OF
      ______________

     

    SIGNED
      AND ACKNOWLEDGED to before me by KY USA ENERGY, INC., Assignee, by and through
      STEVE EVERSOLE, President, who personally appeared before me or satisfactorily
      identified by me, to be the corporation’s free act and deed, on this the ____
      day of June, 2008.

     

    
      	 
	
              NOTARY
                PUBLIC - State at Large - KY

            
	 
	
              My Commission Expires:

            	 	 


    

     

    THIS
      INSTRUMENT PREPARED BY:

    


    BASIL
      LAW
      FIRM

    231
      West
      Main Street

    Glasgow,
      Kentucky 42141

    Phone:
      270-651-9822

    Facsimile:
      270-651-8026

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
                
                

            
	
              DANNY
                J. BASIL

            
	
              Attorney
                at Law

            


    

    


    BONNIE’S
      DOCS/OIL & GAS FOLDER/KYUSA(FARMOUT ASSIGNMENT)

    REVISED
      6/18/08 @ 3:00 P.M. (CDT)